Is the Aerus consignee allowed to sell, remove, or assign collateral without permission?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
Debtor shall not sell or assign or attempt to sell or assign the Collateral or any interest therein, provided, however, that unless an Event of Default has occurred under this Security Agreement, Debtor may sell the inventory to customers in the ordinary course of business.
- (b) Removal of Collateral.
Except for the sale of Inventory in the ordinary course of business, Debtor covenants and agrees that the Collateral will remain at the location stated on the Schedule of Collateral (the "Premises") and that without the prior written consent of Secured Party, Debtor shall not remove or suffer or permit the removal of the Collateral from the Premises.
If, however, the Collateral is removed from the Premises by persons not within the control of Debtor, Debtor will promptly notify Secured Party in accordance with the applicable provisions of this Security Agreement.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, a consignee's ability to sell, remove, or assign collateral is restricted. Specifically, the consignee cannot sell or assign the collateral, or attempt to do so. However, the consignee is permitted to sell inventory to customers in the ordinary course of business, provided that an Event of Default has not occurred under the Security Agreement.
Furthermore, the consignee must keep the collateral at the location specified on the Schedule of Collateral, referred to as the Premises. Removing or permitting the removal of the collateral from these premises requires the prior written consent of Aerus as the Secured Party. If collateral is removed by parties outside of the consignee's control, the consignee is obligated to promptly notify Aerus.
These restrictions are typical in consignment arrangements where the consignor (Aerus) retains title to the goods until they are sold. The security interest ensures Aerus can recover the value of the consigned products if the consignee defaults on their obligations. Prospective franchisees should carefully review the Schedule of Collateral to understand what is considered collateral and the implications of these restrictions on their business operations.